postings

The CME NYMEX WTI crude futures contract is the underlying benchmark in nearly all US domestic crude price contracts. Differences between futures and physical trading arrangements make pricing physical WTI barrels complex. Two formula mechanisms are commonly used in physical transactions that link directly to the NYMEX settlement prices – the CMA average and WTI P-Plus. Today we conclude a two-part look at WTI spot crude pricing.

On Friday (October 19, 2012), West Texas Intermediate (WTI) crude futures for delivery at Cushing, OK closed at $90.05/Bbl – some $20 below the price for the similar grade Light Louisiana Sweet (LLS) crude sold at the Gulf Coast. We believe that price differential will fall as new supplies of domestic and Canadian crude find their way to the Gulf Coast next year (2013). Supplies of South Texas Eagle Ford are already arriving at the Gulf and a new Platts Marker price shows them being priced against LLS. Today we look at the Eagle Ford marker price and what it means for the status of LLS versus WTI.